Arq, Inc. · NASDAQ:ARQ
Arq — Advanced Emissions Solutions — Q1 2017 Earnings Presentation
24 slides from Arq's earnings presentation, May 9, 2017
Slide 1: First Quarter 2017 Results Call
Advanced Emissions Solutions, Inc. Advancing Cleaner Energy First Quarter 2017 Results Call May 9, 2017 © 2017 Advanced Emissions Solutions, Inc. All rights reserved.
Slide 2: Safe Harbor
SAFE HARBOR This presentation includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which provides a "safe harbor" for such statements in certain circumstances. The forward-looking statements include statements or expectations regarding future
Slide 3: First Quarter and Recent Highlights
FIRST QUARTER AND RECENT HIGHLIGHTS Tinuum distributions to ADES were $14.7 million during the first quarter of 2017, an increase of $9.8 million from the comparable quarter in 2016 Completed the lease of a RC facility in late March bringing the number of invested facilities to 14 as of the end of t
Slide 4: Refined Coal Environment
REFINED COAL ENVIRONMENT The refined coal business is proven and yields many benefits to the Utilities, Investors and the environment, however there are hurdles to overcome HURDLES BENEFITS Coal Reputation and Net Income and EPS Improvement Political Stigma Uncertain Federal Tax Reform Uniquely Stro
Slide 5: Financials
FINANCIALS
Slide 6: Financial Highlights
REVENUES $22M $7 || March 31,2017 March 31, 2016 Three Months Ended FINANCIAL HIGHLIGHTS EQUITY METHOD EARNINGS ROYALTIES im $2M sim a March 31,2017 March 31, 2016 March 31,2017 March 31, 2016 OTHER OPERATING EXPENSES $M Ss | | March 31,2017 March 31, 2016 Three Months Ended Three Months Ended Three
Slide 7: Components of Earnings
COMPONENTS OF EARNINGS Three Months Ended March 31, (In thousands) 2017 2016 RC segment operating income $ 15,025 $ 7,870 EC segment operating income 2713 4,631 Segment operating income 15,298 12,501 Adjustments to reconcile to net income Corporate payroll and benefits (1,810) (3,134) Corporate rent
Slide 8: Tinuum Group & ADES: Cash Flow Update
TINUUM GROUP & ADES: CASH FLOW UPDATE Note: ADES owns 42.5% of Tinuum Group and accounts for its investment under the equity method of accounting 8 -8-
Slide 9: Refined Coal
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Slide 10: Refined Coal Facilities Today and Tomorrow
REFINED COAL FACILITIES TODAY AND TOMORROW FULL-TIME OPERATIONS ROADMAP Not Operating and Not Invested 8 RC facilities – installed and waiting for investor 6 RC facilities – yet POTENTIAL to be installed Operating and Invested 28 RC facilities (~100 MT/year) 14 RC facilities leased/sold (40-50 MT/ye
Slide 11: Operating Tons: Invested vs. Retained
Operating Tons: Invested vs. Retained Three Month Ended Invested Retained QTD - Total March 31, 2017 Tonnage (1) 9,746 21 9,768 Count (#) 14 - 14 Note: Numbers within bar graph represent the number of facilities per category as of the end of each quarter presented (1) Tonnage information is based up
Slide 12: Operating Tons: Royalty vs. Non-Royalty
Operating Tons: Royalty vs. Non-Royalty 9 16 14 12 10 11 Tonnage (MM) 10 9 10 7 6 8 8 6 7 7 7 6 4 8 6 8 6 6 6 7 4 11 5 9 7 10 2 - Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Three Month Ended Operating Tons QTD - Total March 31, 2017 Royalty Non-Ro
Slide 13: Emissions Control
EMISSIONS CONTROL
Slide 14: Emissions Control: Current Opportunity
EMISSIONS CONTROL: CURRENT OPPORTUNITY CURRENT FOCUS - MERCURY CONTROL COMPETITIVE DIFFERENTIATORS Mercury control regulation since 2015/2016; with large capital investments complete Cost effective and simple alternative Recurring consumables needed to control mercury Less equipment corrosion Turn-k
Slide 15: Future Cash Flows for ADES & 2017 Priorities
Future Cash Flows for ADES & 2017 Priorities
Slide 16: Projected Future ADES Cash Flows
Projected Future ADES Cash Flows PROJECTED CASH FLOWS (in millions) $70 Based on 14 invested facilities as of March 31, 2017 $60 Results in projected cash flows of $275M to $300M $50 to ADES in total through 2021 (1) $40 Total: $275 – $300 million Each additional refined coal facility could add
Slide 17: Capital Allocation
CAPITAL ALLOCATION Stock buy-back announced Expected $0.25 per Tax Asset Protection Plan Evaluate accretive to repurchase up to $10 share recurring quarterly designed to protect the M&A alternatives million in common stock dividend starting in June Company’s ability to utilize its within dynamic mar
Slide 18: Current Cash Flows vs. Stock Price
CURRENT CASH FLOWS VS. STOCK PRICE $25.0 $? Stock $15.0 ~$13.0 (2) Potential Value? Price (1) Undiscounted $9.4 Under Value $5.0 Current Base Incremental Cash Flows Cash Flows Undiscounted Under Value: Potential Value: Current stock price may be undervalued based on current Ability to add up to 14 m
Slide 19: 2017 Priorities
2017 PRIORITIES OBTAIN NEW TAX EQUITY INVESTORS FOR REFINED COAL: Nurture current & add additional sales channels Dedicate additional resources Leverage improving political and refined coal tax equity market GROW EMISSIONS CONTROL & CONTINUE TRANSFORMATION: Sell recently commercialized chemicals Fur
Slide 20: Appendix
APPENDIX
Slide 21: Appendix A: 10-Q Balance Sheet
Appendix A: 10-Q Balance Sheet(1) (1) See complete, unaudited Condensed, Consolidated Financial Statements and Notes related thereto within the Quarterly Report on Form 10-Q for the period ended March 31, 2017. 20
Slide 22: Appendix B: 10-Q Income Statement
Appendix B: 10-Q Income Statement(1) (1) See complete, unaudited Condensed, Consolidated Financial Statements and Notes related thereto within the Quarterly Report on Form 10-Q for the period ended March 31, 2017. -22- 21
Slide 23: Appendix C: 10-Q Cash Flow
Appendix C: 10-Q Cash Flow(1) (1) See complete, unaudited Condensed, Consolidated Financial Statements and Notes related thereto within the Quarterly Report on Form 10-Q for the period ended March 31, 2017. 22
Slide 24: Appendix C: 10-Q Cash Flow (continued)
Appendix C: 10-Q Cash Flow (continued)(1) (1) See complete, unaudited Condensed, Consolidated Financial Statements and Notes related thereto within the Quarterly Report on Form 10-Q for the period ended March 31, 2017. 23
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